DECISION DECISION/FINDINGS JUSTICE (RETD.) SALEEM AKHTAR, FEDERAL TAX OMBUDSMAN - Brief facts of the case are that the complainant run a hotel and restaurant in Naran. He received an exparte Order-in-Original dated 14.7.2003 from the concerned Deputy Collector imposing a penalty of Rs. 5,000/- for non-filing of monthly sales tax return for March, 2003 and thus came to know that he had been compulsorily registered under Section 19 of the Sales Tax Act. On contacting the sales tax office the complainant was further informed that a penalty of Rs. 5,000/- had also been imposed upon him vide an ex parte Order-in-Original date 30.4.2003 for non-filing of return for the month of February, 2002. It is contended that the complainant was penalized without hearing as no show-cause notice was served on him for compulsory registration or for imposition of penalty as alleged in the Order-in- Original dated 30.4.2003 which was personally collected by him and by then the time for appeal had expired, It is prayed that the complainant be declared exempt from levy of sales tax as he was n6t earning taxable turnover and the Order-in-Original dated 30.4.2003 be vacated.
2. In reply the respondent has stated that being a registered person the complainant was required to file sales tax return under the law and his failure to do so attracted the penal provisions, It is further stated that for registration under Section 19 a notice was issued to the complainant on 31.1.2002 for 11.2.2002 and for its non-compliance the unit was compulsorily registered on 18.12.2002.
It. Is further stated that penalty for non-filing of return for the month of February, 2003 was imposed after giving two opportunities of hearing on 24.4.2003 and 30.4.2003. As regards complainant's contention that his business was seasonal which did not fetch him as much turnover as to make him liable to sales tax, the respondent has stated that it was the responsibility .Of the complainant' to prove his contention but he failed to respons to the formal notices before compulsory registration as well as subsequent show-cause/hearing notices.
3. The representatives of the both sides were heard. The A.R. Of the complainant argued that during winter season the business was closed and due to closure of Naran Road and suspension of communication the complainant did not receive any notice either prior to registration or afterwds regarding non-filing of returns which culminated in imposition of penalty vide ex parte Order-in- Original dated 30.4.2003. The respondent's representative could not furnish any proof regarding service of the said notices on the complainant. He also could not produce any evidence which provided basis for compulsory registration, In fact no enquiry was made by the department to determine the turnover of the complainant, In these circumstances the. Registration of the unit under Section 19 and subsequent Order-in-Original for imposition of penalty are arbitrary, baseless, contrary to law and suffers from abuse of authority. Maladministration is thus established.
4. In the light of the above, it is recommended that:-
(i) The order of registration and Order-in-Original dated 30.4.2003 be cancelled under Section 45A of the Safes Tax Act and fresh proceedings be conducted after enquiries and proper service of show-cause and hearing notices on the complainant;
(ii) Compliance be reported within 30 days.